Provided exclusively by Mergermarket
IAC [NASDAQ:IAC] would like to make three or four acquisitions this year as it scouts for assets in video creation and in marketplaces where it can drive offline-to-online conversions, CFO Glenn Schiffman said.
Video is a key category for the New York City-based media and Internet company, the executive said on the sidelines of the Goldman Sachs Technology and Internet Conference in San Francisco last week.
It will pursue businesses with products that IAC can sell to subscribers to move them into higher tiers of services, said Schiffman. Workflow and marketing tools for video creators would be examples of that, he said.
Technologies that can add new features to IAC’s mobile applications along with tools subscribers can use to distribute content on social media are other capabilities IAC may look for in deals, an analyst added.
It could also look to strengthen its acquisition of Livestream last fall with another technology firm that can improve its live streaming offering for businesses, organizations and individuals, the analyst said.
Vimeo is the standout brand in IAC’s stable of video assets, which also includes workout video website DailyBurn, comedy websites CollegeHumor and Dorkly, hip-hop lifestyle website WatchLoud, and Electus, which connects content creators with potential advertising and technology partners.
In search of a marketplace
IAC will also look to buy companies in marketplaces that are ripe for digital transformation, the CFO said.
Schiffman declined to specify which verticals are piquing IAC’s interest but he said there are other marketplaces the firm is not currently invested in where it sees opportunities to replicate the kinds of deals that it previously made in home services and online dating, though likely at a smaller scale.
Last year, IAC purchased Angie’s List [NASDAQ:ANGI] in a transaction valued at more than USD 500m. IAC combined Angie’s List with HomeAdvisor under one umbrella, ANGI Homeservices [NASDAQ:ANGI].
That deal matched consumers who once paid fees to access reviews of home services on Angie’s List with home services companies that pay HomeAdvisor to connect with homeowners requesting work. Angie’s List eliminated homeowner fees in 2016 to charge service providers advertising fees instead.
IAC moved its other online home-services assets, many of which are focused on countries in Europe, into ANGI Homeservices. IAC owns approximately 87% of the publicly traded company’s equity value.
Marketplaces that can benefit from a similar “network effect” are attractive to IAC, said Schiffman. With more participants on both the demand and supply side, IAC’s offerings become more valuable, he noted.
Reverb.com, a Chicago, Illinois-based online marketplace where musicians buy and sell new and used instruments, is the type of business that might appeal to IAC, this news service reported on 12 February.
Prior to purchasing Angie’s List, IAC made a string of acquisitions in the online dating space that it spun out into The Match Group [NASDAQ:MTCH] in November 2015. IAC remains Match’s largest equity owner.
On earnings calls in 2017, Schiffman and CEO Joseph Levin both said that IAC is unlikely to look for acquisitions in its publishing segment, which includes brands such as Investopedia and The Daily Beast, or in its applications segment, which features Ask.com, Apalon Apps, and SlimWare Utilities.
In November, CNN Money reported that IAC was entertaining offers from suitors interested in The Daily Beast, an online news site. Although Schiffman did not specifically address the report, he said IAC was not anticipating making any divestitures. “We’re happy with our portfolio,” he said.
JPMorgan Chase & Co. has acted as IAC’s financial advisor in many of its previous transactions.
IAC’s shares closed at USD 151 on Wednesday, giving it a market cap of USD 12.4bn.
by Troy Hooper in San Francisco
Value: GBP 358m (Size of Angie’s List acquisition)
Stake Value: More than 30% inclusive